THE government has launched a campaign to sensitise non-profit making organisations (NPOs) against being used as channels for money laundering and financial terrorism.
This comes after the United Nations Security Council (UNSC) in 2019 identified NPOs as possible channels for money laundering and warned member states to be on the lookout.
As a UN member state, Lesotho recently kicked off a campaign to sensitise NPOs about the dangers of being used for money laundering and financial terrorism without their knowledge.
The campaign was announced recently by the Law and Justice ministry, which registers civil society organisations.
While there are no local NGOs found to have been involved in money laundering as yet, the ministry has conceded that it has not been able to enforce full compliance of registered NPOs in the past.
It further warned that it will no longer be lenient in light of NGOs’ vulnerability to money laundering and financial terrorism abuse.
As part of the awareness campaign, NPOs will be required to fully comply with the provisions of the Societies Act 1966 and the Money Laundering and Proceeds of Crime Act 2008 to combat possible money laundering and financial terrorism abuse.
The organisations will also be required to fully disclose the sources of their finances by filing their annual financial statements at the societies’ registry.
“The UNSC has passed a resolution after noting that terrorists may move and transfer funds through nonprofit organisations with or without their knowledge,” crown attorney in the societies’ registry, Advocate Moeketsi Palime said.
“As a result, the UNSC has called upon all members to criminalise the willful provision or collection, by any means directly or indirectly, of funds by their nationals with the intention or in the knowledge that the funds are to be used in order to carry out acts of terrorists in order to prevent and suppress the financing of terrorism,” Adv Palime said.
The UNSC is a key role player in setting international standards aimed at preventing and combating money laundering and terrorist financing.
It works with the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG) to assist members to comply with the requirements of its recommendations.
Adv Palime said the campaign would identify NPOs that are at risk of abuse and advise them appropriately.
He said they would have a clearer picture on the state of the sector when the campaign had made notable progress.
“We are not in a position to say whether terrorism is there or not in the country and we can only have a better picture after the campaign.”
The country must also review some of its laws and regulations to adequately protect civil society from terrorist financing abuse.
On her part, Adv ‘Mamotumi Maliehe, the senior property counsel in the registrar general’s office, said they would emphasise full compliance with the legal requirements of registered NGOs.
The legal requirements of the Societies Act and the Money Laundering and Proceeds of Crime Act will also be communicated to the NGOs.
“NPOs are required to file their financial statements annually, but in the past we have not been fully enforcing this legal requirement. Going forward, we are going to be strict on such legal requirements to combat financial terrorism.”
She said NGOs would also be compelled to update their registration details by providing national identity documents and residential addresses of their directors to improve transparency.
This is not the first sector that has been identified to be susceptible to money laundering. In February 2020, Trade and Industry minister, Thabiso Molapo, said motor dealerships had been identified as a hotspot for money laundering and terrorist financing.
The Trade ministry was responsible for monitoring the industry to combat activities of money laundering and terrorist financing, Dr Molapo said.
“Monitoring of this nature requires intensive surveillance and inspections and as such costly,” Dr Molapo said.
However, his remarks were later rebuffed by the Import Car Dealers Association of Lesotho (ICDAL), which said their members’ business dealings were transparent and done through the formal banking system.